Idea To Funding & The Valuation Game--Journey of Sparsha Learning Technologies

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Idea To Funding & The Valuation Game
--Journey of Sparsha Learning Technologies

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Idea To Funding & The Valuation Game--Journey of Sparsha Learning Technologies

  1. 1. The  Valuation  Game     -­‐-­‐Journey  of  Sparsha  Learning  Technologies     Prof  Shivananda  R  Koteshwar   Director,  The  Amaatra  Academy   Mobile:  98457  22117  /  Facebook:  shivoo.koteshwar   www.docircuits.com     Lounge 47 (www.lounge47.in) Feb 2014
  2. 2.   Sparsha  valuation  with  time  and  “Fair”  use   of  money     Pricing  Challenges     Business  Model  
  3. 3. Kumar Rangarajan Satyam Kandula $10m-$15m Sachin Bansal & Binny Bansal $521m, $1.6B Phanindra Sama $135m Naveen Tiwari $215m, $1B
  4. 4. Incuba'on   Research   Center  at  CORI  
  5. 5. ACTIVITY  BASED   TEACHING,   ACTIVITY  BASED   LEARNING  AND   VIRTUAL  LAB   SOLUTIONS   ECE   • I  YR  :  Basic   Electronics   • II  YR:     Analog   Circuits,   Digital   EE   • I  YR:  Basic   Electrical   • II  YR:   Signals  and   Systems,   Power   Electronics   CS   • I  YR:  Data   Structures,   Programmi ng   • II  YR:   Algorithms,   Networks  
  6. 6.                 You   achieve   something   significant   when   you   do   something   insignificant   (as   seen   by   others)   Its   not   just   about   taking   risks.   Its   about   managing   risks.   Its   about   minimizing   lot   of   smaller  risks  within  that  bigger  risk   Data   shows   it   takes   5-­‐7years     for   an   entrepreneur  to  make    a  mark   Breaking   Inertia   –   Comfortable   job   to   entrepreneur  vs.  Comfortable  job  to  student   to  entrepreneur   Luck  plays  a  significant  role  in  success.  With   right  attitude,  you  can  learn  to  be  lucky!   Market   is   not   just   when   you   have   a   willing   buyer  but  also  an  able  buyer  is  required   First  make  it  work  ,  then  make  it  better   Costs   are   like   fingernails   ..cut   them   constantly  
  7. 7. Don’t Give up
  8. 8. Challenges  in  each  step  of  Entrepreneurship..     ①  Identifying  and  using  the  opportunities  that  exist  in  the  market     Market  Research,  Interviews,  Test  Bed   ②  Converting  the  ideas  into  action     Team  formation,  Money,  Full  Time  vs.  Part  Time   ③  Undertaking  promotional  activities  to  launch  an  enterprise     Logo,   Registration,   Location,   Structure,   Protocol,   Advisory   Members,  Share  Holding   ④   Striving  for  excellence  in  his/her  field  of  work     Quality,  Product  Completeness,  Documentation,  Packaging,  Pricing,   Selling   ⑤   Bearing  the  risk  and  uncertainties  involved     Money,   Team,   Partners,   Distributors,   Multiple   pull   from   different   directions   ⑥   Harmonizing     How,  When  ,  Who  ?  
  9. 9. NOVEL   CUSTOMER  CENTRICITY   INNOVATE   PURPOSE  
  10. 10. MESSAGING   PACKAGING   SIEZING  THE  OPPORTUNITY  
  11. 11.   Slide1                 Define  the  market  size  both  in  units  and  value  terms  where  ever  applicable   If  it  is  new  concept  then  work  out  the  estimated  market         Define  the  current  Customer  pain  areas  and  how  your  business  proposition  will  help  them         Names  of  the  members  of  the  core  team   Name  the  brain  child   Name  the  support  members  of  the  Core  Team  with  their  functionality       Company  Name   In  one  sentence  tell  how  your  business  proposition  is  useful  to  mankind   Define  the  company  Value  proposition   If  you  have  some  customer  case  studies  you  can  exhibit  here       Describe  the  Product  (Functionality,  features,  architecture,  what  core  IP  do  you  have)   Show  your  Product  Development  Roadmap   Slide2    -­‐  The  Core  Team   Slide3  –  Customer  Perspectives   Slide  4  –  Market  Size   Slide  5  –  Company’s  Value  Proposition   Slide  6  –  All  about  the  product  
  12. 12.   Slide7  –  Business  Model               Detail  in  brief  on  the  completion  with  the  names  of  the  key  players  and  their  brands                   Sales  and  Distribution  model   Customer/Pipeline  list       Revenue  Model   Pricing   Financials  during  the  Incubation  Period   Period  of  incubation  =  ?  Months   Revenues  during  incubation   Costs  during  incubation   Net  Burn   Sources  of  Funds-­‐  own=?  And  Borrowed  =?  (Give  Details)   If  it  is  new  concept  then  work  out  the  estimated  market     Give  your  reasons  for  choosing  the  XXX  for  incubating  your  business   Slide8  -­‐  Business  Model   Slide9  -­‐  Competition   Slide10  -­‐Financials   Slide  11  –  Why  incubate  @  XXX  
  13. 13.    MOTEPPCABE     MO:  Market  Opportunity     TE:  Team     PP:  Profit  Potential     CA:  Comparative  Advantage     BE:  Barriers  to  Entry  
  14. 14. LIMITED  DICTION               Investment   Revenue   Expense   Profit   Loss   Business  Plan   UPGRADE  REQUIRED                       Preference  Shares   and  Equity  Shares   Convertible  Shares   Performance   Milestone   Tranche   Cumulative   compulsory   convertible   Preferential  share   Preferential  Dividend   Cumulative  coupon   rate   Pre  Money  Valuation   Post  Money   Valuation   Voting  Power                     IPO   Observer,  Promoter’s   Director,  Investor’s   Director   Termsheet   Due  Diligence   Liquidation,   Dissolution  and   winding  up   Deemed  Liquidation   (Merger)   Conversion  Form   Tag  Along  Rights   Drag  Along  Rights  
  15. 15.   Goal:  To  determine  whether  the  business  case  is  ‘investment  grade’                   Gathering  and  detailed  analysis  of  documentation   Business  plan  and  related  documentation   Additional  requests  for  information  from  management   Market  analysis  (top  down  and  bottom  up)   Search  for  comparable  businesses  and  business  plans   All  market  and  industry  information  readily  available  on  internet   Consultations  with  industry  contacts/technical  experts   In  person  visits  to  confirm  business  case  with     Actual  or  potential  customers     Actual  or  potential  suppliers  or  other  financing  sources     Decision  about  next  steps     Allocation  of  tasks,  establish  project  team  structure     Fix  due  diligence/investment  timeline     Basic  term  sheet  outline   Basic investment decision is made at this level.
  16. 16.   Current  Business     To  confirm  the  current  state  of  the  company     To  determine  and  manage  risks  to  the  current  value  of  the  Company   ▪  Existing   ▪  Contingent     Future  Business:     To  confirm  the  business  plan  in  detail     To  determine  and  manage  risks  to  the  business  plan  in  detail   ▪  Market  (External)   ▪  Organizational  (Internal)     Questions  to  Answer:     Am  I  buying  what  I  think  I  am  buying?     Is  it  worth  as  much  as  I  believe?     What  risks  exist  to  the  my  acquisition  and  its  value,  and  can  these  be   managed?       Is  there  any  reason  not  to  do  this  deal?  
  17. 17.   If  the  chemistry  is  not  right,  arithmetic  will  never  work     TEAM     Are  you  producing  a  vitamin  or  a  headache  tablet     PROBLEM  you  are  solving  (Nature,  big/small,  Market  size)     Competition  –  Who  else  is  doing?  How  are  you  better?     Entry  Barrier     Value  is  created  in  market  and  not  in  xls  sheet     Financing  Risk  :  Capital  Intensity  -­‐Capital  required  for  company  to   reach  infliction  point  (Breakeven  or  sustainable  growth  or  non  linear   growth)     Regulation  
  18. 18.             Stable  and  a  Proud  Team   Amazing  Product   Great  Board  of  Advisors   Closed  the  first  round  of  seed  funding  with   Blume  and  Tempus  Investment  fund   Shortlisted  as  the  Top20  upcoming  startups  in   India  by  CNBC-­‐TechSparks.  Came  6th     On  facebook-­‐   https://www.facebook.com/iLearnMore    and  On   Twitter  -­‐  @idoilearn    
  19. 19.   Marketing     Product  Development     Team  expansion     Application  Engineering   Founder director’s were still working without salary!
  20. 20. Hygiene Factor: Ease of Use
  21. 21. http:/techtroniks.docircuits.com
  22. 22.     Developed  and  launched  HTML5  version  app  of   DoCircuits  for  Windows  8.1  for  Mobile  devices     VSKILLS   :   Certified   Electronics   Design   Associate   launched   ( http://www.vskills.in/certification/Certified-­‐Electronics-­‐Design-­‐ Associate  )               2X  growth  in  online  sales  outside  India   Very  limited  B2B  engagement    and  conversion.   -­‐   All   B2B   engagements   now   done   by   distributors     More  engagement  over  Facebook  (  3X+  growth   since  last  quarter  )     Crowdfuding   on   Indiegogo   not   successful,   cannot   go   ahead   with   course   design   as   funding   goals   have   not   met.   Will   be   returning   the   money  to  individual  contributors     Major   Japanese  distributor  about  to  be  signed,   agreement  in  review     Companies  looking  at  acquiring  us  
  23. 23.   A  Nasscom  study  noticed  that  since  1990,  India  has  seen   the  emergence  of  3,402  product  companies     Of  the  total  3,402  product  companies,  approximately  51  percent   are  based  in  Bangalore  and  NCR  region.       More  than  55  per  cent  of  the  startup  founders  have  less  than  10   years  of  experience  from  2009  to  2012.     The  Indian  Angel  Network,  for  instance,  evaluated  3,400   pitches  in  2012,  shortlisted  82,  and  ended  up  funding  13.     The  year  before,  it  had  received  just  2,000  pitches     In  2013,  there  were  100  merger  and  acquisition  deals   across  the  India's  information  technology  industry     Of  this,  31  whose  value  was  announced  were  worth  $1,906   million  (Rs  11,807  crore),  according  to  research  firm  Venture   Intelligence  
  24. 24. You don’t sell through price. You sell the price
  25. 25.                 Consider   the   psychology   of   prices   and   not   simply   the   economics   Consumer  perception  of  value  is  important   Customers   use   price   less   when   they   can   judge   quality   of   a   product.   Price   becomes   an   important   quality   signal   when   customers   can’t   judge   quality;   price   is   used   to   say   something   about   a   product.     Price  often  depends  on  circumstances  –  You  always  pay  more   to  fly  when  you  want  to  fly       Consumers  are  often  prepared  to  pay  more  if  they  expect  to   get  excellent  service   Adding  value  doesn’t  mean  dropping  price   Price  will  be  compared    -­‐  Other  price  offers,  Prices  previously   paid,   Going   rate,   Alternative   product   price,   Alternative   substitute  price  
  26. 26. SELECT PRICING OBJECTIVE Profit Oriented Sales Oriented Status Quo Target return / Maximize Profit Sales Volume / Market Share Stabilize Price / Competition SELECT BASE PRICE DETECTION METHOD Price based on both demand and costs Cost-plus pricing Price set in relation to market alone DESIGN APPROPRIATE STRATEGIES •  Price vs. nonprice competition •  Skimming vs. penetration •  Discounts and allowances •  Freight payments •  One price vs. flexible price •  Psychological pricing •  Leader pricing •  Everyday low vs. high-low pricing •  Resale price maintenance
  27. 27. Internal reasons – Marketing objective (survival, market share, profit maximization, quality leadership), cost, etc External reasons - Nature of the market, demand, Competition, Environmental factors (economy, resellers, government)
  28. 28. Loss leader
  29. 29. Amazon Google Apple UPS Sony Location Packaging Advertising Branding Service Tata, reliance, airtel, SBI, Infosys 5c 5s Vertical product variation Sponsorship - £25m-a-year Product Modifications Product mix
  30. 30. Optional (Accessories) Bundling Captive By Product
  31. 31. Penetration Skimming SkimmingPenetration recover high R&D costs Price Lining Move inventory, stimulate D, extend product life Psychological Promotional
  32. 32. Prof  Shivananda  R  Koteshwar   Director,  The  Amaatra  Academy   shivoo@pes.edu  /  Facebook:  shivoo.koteshwar   BLOG:  http://shivookoteshwar.wordpress.com   SLIDESHARE:  www.slideshare.net/shivoo.koteshwar  
  33. 33. A business model describes the rationale of how an organization creates, delivers, and captures value. It’s the story that explains how an enterprise works Canvas is a shared language for describing, visualizing, assessing, and changing business models References from the book: Business Model Generation ISBN: 978-0470-87641-1
  34. 34.   FROM  Product/Market  Segment  Oriented   Approach   ▪  Product  and/or  service  at  its  center  that  focuses  on  a   customer’s  job-­‐to-­‐be-­‐done  –  Value  Proposition     TO  a  Holistic  Business  Model  Approach  to   achieve  long  term  competitive  advantage  
  35. 35. Customer Relationship Customer Segmentation Value Proposition Channels
  36. 36. Key Activities Key Partners Key Resources Cost Structure Revenue
  37. 37. Key Activities Customer Relationship Key Partners Channels Value Proposition Key Resources Cost Structure Customer Segmentation Revenue
  38. 38. Prof  Shivananda  R  Koteshwar   Director,  The  Amaatra  Academy   shivoo.koteshwar@gmail.com/  Facebook:  shivoo.koteshwar   BLOG:  http://shivookoteshwar.wordpress.com   SLIDESHARE:  www.slideshare.net/shivoo.koteshwar  

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